Ok it was late, I had a long day and the iMac is annoying me.
I selected the "reinstall Os from last backup" from the menu after pressing
Cmnd+R on start up.
I did the disc utility's part first but nothing was found wrong.
This all started when safari locked up, and I then got the gray screen
and spinning wheel after restart.
This stayed like that for half an hour so I jumped onto the iPad
to see if other people had the same problem, yep they did, but
using some of the methods did not help all I kept getting was the
Grey screen.
So I reinstalled mountain lion from last backup, now it's running
from my backup disc, I know this as I turned it all off and restarted without backup disc on and the iMac goes back to a grey screen.
Switch on the backup and it all works.